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Business optimism at a two-year high

New Zealand business confidence jumped to its highest level in two years at the end of 2006, according to National Bank’s monthly survey. And residential property values are holding or gaining slightly in our larger urban areas.

One of the best indicators of economic prospects – firms’ expectations about their own activity – rose to a net 24 % expecting improved prospects versus 18 % last month. According to the bank’s economist ,this indicator is predictive of an economic growth rate of about 2.5% over the next 12 months.

The boost to business confidence is based on lower petro prices (linked o the strong Kiwi dollar), unemployment at a rock-bottom 3.8%, continuing immigration flows and the above-mentioned, stable residential property prices.

The average New Zealand house price is now $347,005, but Quotable Value noted that while property values throughout the country were rising, the growth rate had been easing throughout this 12-month period.

Franklin, where the Tim Manning ‘Whisper Cove’ development was purchased by Sydney-based Lance Hodgkinson, who was involved in financing the Robert Railley designed development through Bluestone Property Services, for $215-million, has had the strongest growth in the Auckland region, with a growth of 9.4%, a figure not seen since February-March.

The construction industry too is relishing the prospects of New Zealand – particularly Auckland – hosting both the 2011 rugby world cup and the cricket version four years later. The proposed Elliott Tower development and the Auckland waterfront and Tank Farm developments are all expected to come into play.

Overall, confidence has improved in every sector, bar agriculture, which is continuing to battle the stubbornly high Kiwi dollar. There was good news on the inflation front too, with fewer than a quarter of the firms expecting to raise prices, against nearly a third in the previous month.

Productivity, according to National Bank’s Cameron Bagrie, remained “woeful”, thanks to employment growth exceeding economic growth for more than a year now.

This article was made possible for the NZ Property Monitor by Timothy Terence Manning